Chapter ll

REVIEW OF LITERATURE

Online Shopping

Online shopping is the process of buying goods and services from merchants who sell over

the internet. Shoppers can visit a web store from the comfort of their homes and shop as they sit in

front of a computer. People around the world are becoming increasingly busy with their lifestyles

and are looking for the fastest, easiest, and cheapest way to complete a variety of our routine

tasks. Because of this phenomenon, traditional retailers have become an unfriendly alternative for

a part of the population for a variety of purchases. The main benefit of e-commerce is that people

can purchase wherever they are without having to leave home and find everything they need just

by typing a couple of words.1

Online Consumers

As stated in Oberlo (drop-shipping app), with the rise of e-commerce, the number of online

shoppers worldwide rises along with it. In 2021, the numbers of online shoppers are at 2.14 billion.

That makes 27.6% of the 7.74 billion people in the world. In other word more than 1 out of every 4

people is an online shopper. They have also found out that there were 900 million more online

shoppers in 2021 than there were in 2020, representing a 4.4 percent year-over-year increase. 2

This increase is not surprising as internet connectivity penetrates the world and online

shopping become increasingly convenient. People these days have hectic schedules that is why

they do not have enough time to buy things personally. As a result, people greatly benefit from

online shopping because it eliminates the need to visit the stores and buy things physically.

Research by We Are Social and Hootsuite reveals that 67 percent (73.91 million) of the

country’s total population of 107.3 million people are active Internet users. 38.88 million people in

the Philippines have purchased a product or service online. In the same study, 25 to 34-year-olds,

1
Jimenez, D., Valdes, S., & Salinas, M. (2019). Popularity Comparison between E-Commerce and Traditional Retail Business.
https://www.econstor.eu/handle/10419/194866. Date Retrieved, November 2022.
2
https://www.oberlo.com/statistics/how-many-people-shop-online
followed by 16 to 24-year-olds, shop at least 3 to 6 times a week. Out of all age groups, these are

the most likely to shop online every day.3

As mentioned, young Filipinos make up the majority of online shoppers in the Philippines.

Most Filipino online shoppers are members of the Gen Z and millennial age groups, which are also

the country’s most dominant internet user population. Millennials were the first generation to grow

up with the internet. So it’s probably not surprising that they’re also the generation most likely to

shop online.

In the study of D. Tighe, United Kingdom (UK), over 80 percent of the population makes e-

commerce purchases, or to put it in other words, over four in five UK consumers are digital buyers.

Over the last couple of decades, online shopping has become ubiquitous, not just in the UK, but

worldwide; moreover, the numbers are still growing. 4

Given that the coronavirus (COVID-19) pandemic has had a strong impact on the daily lives

of individuals, it comes as no surprise that it has also influenced their shopping behavior. When

asked whether the crisis had caused them to buy more, less, or the same amount online, roughly

70 percent of British respondents stated that their online purchases had increased compared to

before the pandemic. This increase in shopping online applied to several industries, including the

food retail sector. In fact, the share of food retail sales made online in Britain had doubled and

remained relatively stable since the first lockdowns. In that vein, a large percentage of UK

respondents believed they would continue to shop for food and groceries online even after COVID-

19 ends.

According to the Canadian Press, in Canada, at the beginning of the pandemic, curfews

were imposed, with some provinces curtailing in-store shopping. During this period, Canada’s

online sales grew by 75.0%, from US$35.3 billion in 2019 (6.9% of total retail sales) to $61.8 billion

in 2020 (12.7% of total retail sales). More specifically, 76% of Canadians purchased physical

3
Kemp, S. (2021). Digital 2021: The Philippines. https://datareportal.com/reports/digital-2021-philippines. Date Retrieved,
November 2022.
4
Tighe, D. (2022). Online Shopping Behavior in the United Kingdom (UK) – Statistics & Facts.
https://www.statista.com/topics/7887/online-shopping-behavior-in-the-uk/#topicHeader__wrapper. Date Retrieved, November
2022.
goods, 68% bought digital goods or services, 9% spent money on peer-to-peer accommodation

services, and 49% bought other services.5

In an article published by OpenGov Asia, the Philippines Trade Secretary stated that as

Filipinos adapt to digital technology in the midst of the pandemic, the country will be the next

technological leader in Southeast Asia. He said at the Digital Filipinas Movement’s launch that the

Department of Trade and Industry (DTI) agrees with the Digital Pilipinas Movement that the

Philippines has the potential to be a technological leader in Southeast Asia in the future. 6

The growth of E-Commerce in the Philippines has shifted dramatically at an unprecedented

pace during the COVID-19 pandemic, forcing consumers to shop online. The change in consumer

behaviour created a domino effect both for physical stores and e-commerce platforms.

Based on the study conducted by Lucero et al., he determined whether there is a significant

relationship between consumer perception and purchase behaviour for online shopping among

students. It has been found out that the respondent’s perceptions and their purchase behaviour for

online shopping are both high. To sustain their high perception of online shopping, it is suggested

that web developers incorporate features on their websites regarding convenience, security,

benefits, and leisure. It is important for online marketers, entrepreneurs, and businessmen to

consider the fact that students spend more time on the internet and that this factor will likely

increase the students’ online shopping behaviour. 7

According to Manglinong, D., “Why Online Shopping is Booming in the Philippines,” the

reason most people prefer shopping online, especially during the Christmas season and special

holidays as early as December, is because of convenience, cheaper sales, and special deals.

These are the most significant reasons why consumers like to shop online. It is also stated that

online shopping has been growing for the past few years; as early as 2015, it was revealed that 9

out of 10 Filipinos would prefer online shopping to actual shopping since people can save a lot due
5
Shaw N., Eschenbrenner B., & Baier, D. (2022). Online Shopping Continuance After COVID-19: A Comparison of Canada,
Germany and the United States. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9379614/. Date Retrieved, November 2022.
6
Hani, A. (2021). Digital Roadmap to Boost Philippine E-Commerce Industry. https://opengovasia.com/digital-roadmap-to-boost-
philippine-e-commerce-industry/. Date Retrieved, November 2022.
7
Mahinay, R. B., Tubio, E. M., Altaque, J., Lucero, K., Tagam, R. G., Toling, L. F. R., Veri, M. G. (2016). Consumer Perception and
Purchase Behavior on Online Shopping Among Students in Mindanao University of Science and Technology.
https://www.researchgate.net/publication/309187379_CONSUMER_PERCEPTION_AND_PURCHASE_BEHAVIOR_ON_ONLINE_SH
OPPING_AMONG_STUDENTS_IN_MINDANAO_UNIVERSITY_OF_SCIENCE_AND_TECHNOLOGY. Date Retrieved, November 2022.
to certain online shops that offer special deals or discounts for consumers rather than in an actual

store. When using e-commerce as a medium for shopping online, people must still consider factors

that could cost them a lot of money and time due to scams or fraud in the online world. 8

According to the article in Orange Magazine, “Mastercard Survey: More Filipinos Keen on

Online Shopping,” three out of 59% of the online population in the Philippines accesses the

Internet to shop. Filipinos turn to the Internet to shop for the following categories: airline tickets

(38.4%), home appliances and electronic products (35.1%), clothing and accessories (31%), hotels

(29.9%), and computer software (29.4%). However, sites of app stores (50.1%), music downloads

(42.6%), and home appliances and electronic products (38.2%) draw the most web traffic. In

addition, according to this article, most Filipinos are satisfied with online shopping, describing it as

easy (73.3%), convenient (71.9%), or fun (64.4%), and expressing a greater likelihood to purchase

in the next 6 months (79.2%). All these figures represent improvements from the results of the

2013 study (61.4%, 63%, 58.2%, and 68.2%, respectively). 9

When using e-commerce as a medium for shopping online, people must still consider

factors that could cost them a lot of money and time due to scams or fraud in the online world.

According to the article by Reformina, I. (2015), “DOJ Warns Public on Online Shopping Fraud,”

the Department of Justice (DOJ) warned the users of online shops regarding online fraud among

online transactions in e-commerce. It has been advised by the Department of Justice that in order

to avoid unexpected frauds or scams, people must protect their computers by installing security

software (anti-virus) on their laptops and by updating their anti-spyware. It is also advised by the

public to be aware of the online shops they are going to purchase a product from, and with that,

consumers must do background research regarding the owner of an online shop and suppliers,

even the feedback of the customers regarding the product they purchased from the shop and the

owner of the shop.10

8
Manglinong, D. (2018). Why Online Shopping is Booming in the Philippines. https://interaksyon.philstar.com/trends-
spotlights/2018/11/07/137579/why-online-shopping-is-booming-in-the-philippines/. Date Retrieved, November 2022.

9
Team Orange. (2015). MasterCard Survey: More Filipinos Keen on Online Shopping. https://orangemagazine.ph/2015/more-
filipinos-keen-on-online-shopping/. Date Retrieved, November 2022.
10
Reformina, I. (2015). DOJ Warns Public on Online Shopping Fraud. https://news.abs-cbn.com/business/05/01/15/doj-warns-
public-online-shopping-fraud. Date Retrieved, November 2022.
Customer Satisfaction

Satisfaction is a person’s feelings of pleasure or disappointment that result from comparing

a product’s perceived outcome to their expectations, as said by Kotler and Keller. Whereas

customer satisfaction, according to Jahanshahi, is the result of a customer’s perception of the

value received in a transaction or relationship, where value is related to perceived service quality

relative to price and customer acquisition costs. However, it is in contrast with the research of Tu,

which indicated that customer satisfaction is viewed as influencing repurchasing intentions and

behaviour, which, in turn, leads to an organization’s future revenue and profits. 11

Customer satisfaction is customer feedback in the form of evaluation after purchasing some

products or services compared with customer expectations. A satisfied customer means that there

are similarities between the performance of the products and services and the expectations of the

customers, which will encourage them to repurchase the products. At the same time, a

disappointed customer would persuade the other customers not to repurchase, and as a result,

they would move to another brand competitor. Customer satisfaction is measured by matching

customer expectations with what meets the needs and desires of the customers. To meet the

expectations of online consumers, it is measured through (1) price, (2) convenience, and (3)

product quality.12

Price

The price is the amount of money that must be paid by the customer to get the product.

Actual prices are the discounts or surcharges relative to price expectations, according to prospect

theory. The degree to which consumers distinguish and react to price changes is called price

sensitivity. Price sensitivity can work as an indicator of how much a consumer is willing to pay.

Therefore, price has an important effect on consumers’ purchase behaviour and, as a result, on

sales and profits of the business.13

11

Jusoh, Z., Ling, G. H. (2012). Factors Influencing Consumers’ Attitude Towards E-commerce Purchases Through Online Shopping.
https://www.semanticscholar.org/paper/FACTORS-INFLUENCING-CONSUMERS%27-ATTITUDE-TOWARDS-Jusoh-Ling/
327f0ec65bd0e0dabad23c42514d0e2ac8b05a97. Date Retrieved, November 2022.
12
Razak, I. (2016). The Impact of Product Quality and Price on Customer Satisfaction with the Mediator of Customer Value.
https://core.ac.uk/download/pdf/234694248.pdf. Date Retrieved, November 2022.
13
Kusumah, R. (2015). ANALYZE THE EFFECT OF TRUST, PRICE, QUALITY AND PERCEIVED RISK TOWARD CONSUMER PURCHASE
 A price discount is a very prevalent marketing strategy to attract consumers by providing an

extra value or insensitive, which encourages consumers to purchase the promoted products

immediately. According to the economic effects of price discounts, a price discounts provide a

monetary gain, and incentive to encourage consumers to purchase the product. Consumer

perceived a higher level of savings for a product when a higher price discount is provided. 14

Convenience

Convenience is the foundation of e-commerce and a major factor in the recent surge in

online purchasing. The ease of internet shopping allows you to buy goods whenever and wherever

you like, pay however you like, and have them delivered anyway you like. Therefore, it makes

sense that convenience is altering how people shop and perceive particular shopping options, as

the most recent research from the National Retail Federation demonstrates. For this reason, when

it comes to showcasing their offering, e-commerce brands need to think about more than just the

value and price of the products they are offering. 15

Convenience is probably why this generation chose to patronize online shopping. It made

purchasing things a lot easier and less hassle.

In the past decade, there has been a dramatic change in the way consumers have altered

their shopping habits. Although consumers continue to purchase from a physical store, they find it

very convenient to shop online since it frees them from personally visiting the store. Internet

shopping has its own advantages, and it reduces the effort of traveling to a physical store.

Decisions can be made from home at ease by looking at various choices and prices that can be

easily compared with the competitor’s products to arrive at a decision. 16

BEHAVIOR IN ONLINE SHOPS INSTAGRAM. https://ejournal.unsrat.ac.id/index.php/jbie/article/viewFile/9843/9429. Date

Retrieved, November 2022.
14
Lee, J. E., Chen-Yu J. (2017) Effects of price discount on consumers’ perceptions of savings, quality, and value for apparel
products: mediating effect of price discount affect.
https://www.researchgate.net/publication/323214382_Effects_of_price_discount_on_consumers’_perceptions_of_savings_qual
ity_and_value_for_apparel_products_mediating_effect_of_price_discount_affect. Date Retrieved, November 2022.
15
Expert Commentator. (2020). Convenience is Driving E-commerce Growth and Influencing cons Consumers’ Decision.
https://www.smartinsights.com/ecommerce/customer-experience-examples/convenience-is-driving-e-commerce-growth-and-
influencing-consumer. Date Retrieved, November 2022.
16
Dr. Shanthi R., Dr. Desti K. (2015). Consumers’ Perception on Online Shopping. https://www.google.com/url?
sa=t&source=web&rct=j&url=https://researchonline.jcu.edu.au/39753/1/Dr.%2520Desti%2520Consumers%2520perception
%2520on%2520Online
%2520Shopping.pdf&ved=2ahUKEwiajNnb9Jv7AhUaoWMGHbVSD14QFnoECBEQAQ&usg=AOvVaw1Ar7IQCG1zIQlRLQB1G8xy.
Date Retrieved, November 2022.
  Information about apparel includes apparel’s price, size, colour, texture, and laundry

instruction which are crucial for online apparel shoppers. When consumer have enough

information about the apparel, they will make decision whether to purchase the apparel. 17

According to Paulo, Susana and Margarida, consumer purchases product depending on

how easily and how soon they can contact the retail store. Online shopping has improved these

aspects for customers and they can place order while sitting at home via online shopping. 18

Product Quality

The quality of the product is another major factor that affects business. The satisfaction of

the customers is dependent upon the quality of the products and services provided by the

companies. It has been analysed that the perception of the consumers on the quality of the

products as well as the services of the business organization under the retail industry is regularly

associated with some properties such as durability, stability, etc. Therefore, the organizations

under the industry of retail are utilizing the best as well as effective quality in order to formulate the

products as well as the services with good quality.19

Product quality is the characteristics of a product or a service that bare on its ability to

satisfy stated or implied customer needs.

Product quality is the actual functionality of the product, consistency between the quality

specification from online shop and real quality of the physical product. Customers are likely to visit

an online shop with various and high quality products. If the product quality meets their

expectations, customers tend to regard the online shop as useful and continue to visit it. 20

17
Lin, P. (1982). The Effects of Consumers’ Online Shopping Goals and Their Characteristics on Perceived Interactivity and
Shopping Behaviors. https://mospace.umsystem.edu/xmlui/handle/10355/4577. Date Retrieved, November 2022.
18
Duarte, P., Silva, S., & Ferreira, M. (2018). How convenient is it? Delivering online shopping convenience to enhance customer
satisfaction and encourage e-WOM. https://www.sciencedirect.com/science/article/abs/pii/S096969891830225X. Date
Retrieved, November 2022.
19
Ibid.
20
Laras, P. H. (2016). THE EFFECT OF PRODUCT QUALITY AND DELIVERY SERVICE ON ONLINE-CUSTOMER SATISFACTION IN
ZALORA INDONESIA. https://www.semanticscholar.org/paper/THE-EFFECT-OF-PRODUCT-QUALITY-AND-DELIVERY-SERVICE-
Handoko/8bd22843612fe4945a24a409081ee1e3d4bda119. Date Retrieved, November 2022.